Renewables, Efficiency Gain Ground

Frustration with energy prices draws sharp reaction to cuts in the fiscal year 05 U.S. budget. In addition, the World Bank is advised to focus on renewables.

Calls for increasing energy efficiency and emphasis on renewables are coming from a variety of sources focused on energy--not just the usual suspects. As might be expected, renewable energy advocates greeted President Bush's 2005 U.S. budget with faint praise. Non-governmental organizations (NGOs) representing a spectrum of interests, from environmental to the petrochemical business, agreed on the need for greater efficiency to contain costs of the latter's prime raw material, natural gas. And, in a major step, a consultant to the World Bank said that organization should quit financing extractive industries in developing countries and focus instead on promoting renewables.

The Alliance to Save Energy said this week it was pleased that President Bush recognized the need for federal investment in energy efficiency. The Alliance was one of several voices raised in support of efficiency, renewable energy sources, or both. "...[I]nvestments in energy efficiency yield important economic, national security, and environmental returns, particularly at a time when many domestic programs are being cut," said Kateri Callahan, president of the Alliance.

"At the same time," she said further, "we call on Congress not only to reverse proposed budget cuts to the critical energy efficiency programs slated for reductions, but also to increase their funding above last year's levels. We cannot afford to cut funding for programs that educate consumers and industry and help move new, energy-efficient technologies into the marketplace."

"With natural gas prices through the roof, oil imports rising, and large parts of the country remaining in the grip of a bone-chilling, energy-demanding winter," Callahan continued, "now is the time to increase our nation's investments that return natural gas, oil, and electricity savings. Energy efficiency must be the cornerstone of our nation's energy efforts--these investments offer paybacks in jobs, lower energy costs, and clean air."

Budget Cuts
Sustainable Energy Coalition analysis skipped the positives and went directly to the budget cuts of renewables. The SEC, a coalition of more than 70 national and state business, consumer, environmental, and energy policy organizations, said the Bush Administration has proposed cuts totaling $29 million in the U.S. Department of Energy's energy efficiency and renewable energy (EE/RE) programs--reducing funding levels to $1,252 million in FY05 from $1,281 million in FY04.

The SEC analysis said that while the DOE's overall EE/RE budget is reduced by 2.3 percent, significant increases in funding for weatherization (up $63 million) and hydrogen (up $13 million) mask far deeper cuts in several core programs. These include solar (cut $3 million), biomass/biofuels (cut $15 million), vehicle efficiency technologies (cut $23 million), distributed energy resources (cut $9 million), industrial efficiency technologies (cut $44 million), and the Federal Energy Management Program (cut $5 million). Funding levels for other programs such as geothermal, wind, and hydropower remained essentially flat.

The SEC said cuts in funding for sustainable energy programs were not limited to the Energy Department. For example, at the U.S. Department of Agriculture, the White House is proposing only $10.8 million for the Sec.906 Renewable Energy & Energy Efficiency Grant & Loan Program, although the mandatory funding level is $23 million. Similarly, the White House is proposing to provide only $15.5 million of the mandatory $40 million for the USDA's "Value-Added" grants program which provides funding for new uses--including renewable energy--for agricultural products.

Dramatic Effect of Efficiency
Another NGO, the American Council for an Energy Efficient Economy, joined in--representing the viewpoint of the petrochemical industry.

A letter was sent to the president by the ACEEE January 20, signed by 11 chemical industry CEOs. It challenged President Bush and leaders of Congress to address the unfolding crisis in our nation's "go-to" energy source--natural gas. "This situation threatens to curtail the current economic recovery in its tracks," the letter said. Rising gas prices have added $111 billion in costs to the economy since 2002, not only sending home heating bills sky high, but also destroying thousands of jobs in gas-intensive industries such as chemicals and fertilizers.

According to the ACEEE, new U.S. drilling, the Alaska gas pipeline, and imported liquefied natural gas (LNG), will take five years or more to come online. Energy efficiency is the most effective near-term solution. The chemical industry CEOs' letter reflects the urgent need for action on saving energy, stating that "we need a concerted national effort to promote greater energy efficiency."

The ACEEE pointed to research that documents the dramatic effect of that even relatively small savings. The 2003 study, titled "Impacts of Energy Efficiency and Renewable Energy on Natural Gas Markets," is based on the same modeling methods used by the National Petroleum Council. It shows that as little as a two percent efficiency improvement in homes, offices, and factories can cut wholesale gas prices by 20 percent. It also shows that saving electricity cuts gas use more than direct gas savings, because so much gas is used in power generation. These efficiency gains would create over $100 billion in economic benefits, and would help restore jobs in the chemical industry. The ACEEE's report can be downloaded at American Council for an Energy-Efficient Economy.

World Bank: Focus on Renewables?
A big alarm of another sort sounded for companies involved in production of petroleum or other minerals from developing countries. A review of international minerals projects fared badly in a report by the Extractive Industries Review, an advisor to the World Bank. The EIR is a select committee appointed by the World Bank in 2001. Its head is Dr. Emil Salim, once Minister for the Environment for Indonesia.

In the five-volume report, titled "Striking a Better Balance--The Extractive Industries Review," the EIR recommended that the World Bank increase its funding of renewable energy projects and phase out the financing of coal and oil production in developing countries.

In a letter to World Bank president James Wolfensohn, presented here at length, Dr. Salim set a careful context for the recommendation. "This is feared by some in the industry as a signal to withdraw their 'social license' to operate. This of course is not my intention. I fully respect the important role that the oil and coal industry can play in meeting the energy needs of the world. However, based on my EIR experience, I am confident that the industries can move forward without WBG financing, especially if the WBG continues to help poor countries with rich extractive resources to improve the quality of governance in the sector, which I believe should continue. My recommendation to phase out of financing coal and oil extraction is based on my conviction that the WBG should play a leading role in accelerating the growth and use of renewable energy throughout the world. It is crucially important for the WBG as a global institution to immediately increase support for renewable energies and help the world de-link energy use from greenhouse gases in order to sustain life in the world."

"Another specific recommendation that has raised some disagreement," he continued, "is my emphasis on the importance of free and prior informed consent. Key elements of ensuring that projects do not exacerbate poverty for indigenous peoples are recognition of and respect for their right to give their free prior and informed consent, their right to own and control their traditional lands, territories, and resources, and their right to be free from involuntary resettlement. In this respect, I consider that the revision of the Safeguard Policy on indigenous peoples is a fundamental test for the World Bank's commitment to poverty alleviation through sustainable development. In this respect, the revised policy needs to include the abovementioned rights, and consensus must be reached with indigenous peoples about its content. To be credible and effective, the Safeguard Policy on indigenous peoples must be seen by the intended beneficiaries to provide adequate and meaningful safeguards."

"Whatever the agreements or disagreements reached among stakeholders," he stated further, "it is important to keep in mind that sustainable development is a global issue, with the dimension of justice as well as the dimension of sustaining Earth's carrying capacity. Climate change involves extractive-industry-related issues that are largely due to the past and current behavior of industrial countries. And yet developing countries must pay the price of the negative impacts and mitigation. The issue of climate change merely highlights the unequal playing field between developing and industrial countries, in which today's global development pertains. I strongly feel that this must change."

"Since the WBG is committed to alleviating poverty through sustainable development," he continued, "it has a moral obligation to change its priorities, working arrangements, and internal incentive systems and to use all the power it possesses, including convening power, to meet 'the challenge of leadership' to reach for 'a new global balance.'"

"It is with this message of hope," he concluded, "that I invite the WBG to continue in partnership of open dialogue and cooperation with all stakeholders to alleviate poverty through sustainable development and to strive for a level playing field between developing and industrial countries by implementing the recommendations of the Extractive Industries Review for striking a better balance."

Is the Only Question: When?
So the chemical business and some environmental groups appear to agree on the need for more energy efficiency. Additionally, increase in emphasis on renewables is being recommended by many NGOs. And the World Bank's advisors are recommending a change in focus to renewables. Greater emphasis on efficiency and emphasis on renewables may in fact be the road ahead. Really, it's only a question of when.